On why Schilling sees deflation on the horizon:
“In my new book, I identify seven different types of deflation. Now five of those are already in place — we’re having financial asset deflation, tangible asset deflation, commodities are coming down, wages are coming down. The one that hasn’t kicked in yet is goods and services deflation. The point is that the whole world is really marking down assets. It’s marking down the whole spectrum. I don’t think goods and services are going to hold up in terms of inflation. I think that will move to deflation fairly soon.” Link
Let’s just run with this “deflation” assumption. Let’s assume <del>Smokey</del> (slip) Schilling is right – for a second. So we have deflation. Super. Prices come down, the dollar strenghtens and that is a good thing.
Right?
Well, not for government revenues. Our government debt doesn’t deflate. Professor Kotlikoff pegs our debt at 200 trillion, I’ve said 128 trillion and Bill Gross says 60 trillion off balance sheet and to that we can add another 14.6 for the non-Enron accounted for debt.
Let’s be conservative and go with Gross’s numbers.
We now take in 2 trillion and we piss away 4 trillion. Or more. What’ll happen when we take in less than 2 trillion in tax revenues because we have deflating prices?
We could default. That would be massively inflationary as Greece is about to show us. We import half of our 20 million barrels a day in oil. Wonder how much gas will cost when our dollar goes from .04 cents in value to .00000000000000000000000000000000000004 cents in value?
We could continue to print the difference. Zimbabwe here we come.
We could raise rates. Oops, our interest on debt service would kill us and kiss the economy goodbye as commercial credit along with every other type of interest rate would be a firehouse on an already smoldering economy. And seriously, we’d be at Greek numbers. Triple digit interest numbers in order to entice enough people to invest in a country that holds more debt than any other country on the globe.
We could cut Grannies Social Security and all her other benefits, cut 46 million people getting food stamps, toss the 99’rs off unemployment. Oops, we’d have massive social unrest and even less in tax revenues.
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Debt repudiation is the only way to go. While painful, the correction would be relatively quick, the FSA would be disbanded, mis-allocation of resources would cease, and the government would shrink drastically, because no one would lend them money. What’s not to like?
The alternative is hyperinflation, in which we wipe out the middle class. But this is politically expedient. Most Americans are too stupid to understand its cause or who is behind it all. The politicians and central bankers will play this card, because it’s all they know.
Ok, so ole Stan said to sell the market. But it opens over 100 points higher? Does that mean old Stan is a dumbass? Yep.
Listen, you ever heard of ‘fools gold?” Ever? Did you guys know that big banks control the market? Goldman Sucks comes to mind. They have super fast computers and inside info.
When I said ” sell all your stocks today” I was only talking to the average investor, not the professional Day trader. Day traders can make a fortune if they are good at it. They can also lose their naked ass.
In spite of the Dow being up today, I stand by my advice. SELL!!!
Thanks Captain Obvious.
We could default. We could print. We could raise rates. We could cut entitlements.
Mail your resume to The Economist right now. They could use some really deep thinkers.
em·bas·sy (mb-s)
n. pl. em·bas·sies
1. A building containing the offices of an ambassador and staff.
2. The position, function, or assignment of an ambassador.
3. A mission to a foreign government headed by an ambassador.
4. A staff of diplomatic representatives headed by an ambassador.
I wrote this article just for you Smokesters.
I know how difficult it is to understand that a B-52 carpet bombing 2 year olds really isn’t an embassy so when I saw this deflation piece on 0Hedge I figured I’d better explain it to you in shoe size IQ terms.
If it’s so obvious, Smokey, why isn’t it being done?
Help Smokey pick which one is an embassy:
A.) [img
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OR
B.)[img
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The now famous Smokey Faux Pas:
“DavosSherman and Stuck, Try to get your minds around this. Struggle with it. Perhaps spend a few months on it. With much effort and a lot of help, you may come to realize that having embassies abroad does not equal POLICING the world. BTW, have we been POLICING the world since WWI, since we’ve had troops abroad that long?”~Smokey
Davos,
I noticed Australia was painted red on your map. How long have we been POLICING Australia?
How about Canada? How about China ?
Since, according to all curs, any presence in another country means we are POLICING it.
More LIES by the curs, when the truth just won’t cut it.
3 fucking wars all at once.
Afghanistan is long than Vietnam.
WMD’s were as valid as the Gulf of Tonkin North Vietnamese PT boat “attack”.
156 countries out of 198 countries.
I’m not a moron Smokey. Unlike you I can distinguish a carpet bomber from a fucking embassy.
Davos:
Are we carpet-bombing 156 countries? Nay.
Are we carpet-bombing the sandbox? Not for quite a few years, unless you count Libya, which doesn’t count because it’s an international effort, with assistance from the wisdom and humanitarian efforts of our esteemed leader Barack Hussein Obama…
To say that the efforts of the Matron Hillary Clinton to corral the unruly children of the world community doesn’t require the stern mother’s hand of military might is sheer ignorance. The Baathist party will stop at nothing to destroy any semblance of fair trade in the region… and will indeed open fire on it’s citizens. Look at Syria. They need a good swat in the ass from an International Coalition and soon.
Davos,
HOW MANY B-52 CARPET BOMBINGS OF 2 YR OLDS HAVE WE DONE IN:
Australia, Canada, China, France, England, Switzerland, Spain, Russia, Portugal, Ireland, Greece, Ecuador, Panama, Argentina, Brazil, Chile, Venezuela, Mexico, Uruguay, Cuba, Singapore, Syria, Pakistan, India, Thailand, Indonesia, Guam, Greenland, Finland, Sweden, Austria, Belgium, Egypt, Israel, Algeria,Hong Kong, Zimbabwe, Colombia, Morocco, Bahamas, Jamaica, Jordan, Uganda, Antarctica, Iceland, Moldova, Belize, Guatemala, Taiwan, Angola, Mali, Peru,Puerto Rico, Bahrain, Kenya, Andorra, Liechtenstein, Cameroon, Luxembourg, Denmark, Burma, Estonia, Haiti, Paraguay, Armenia, Saudi Arabia, Aruba, Costa Rica, Nepal, Botswana, Latvia, Bolivia, Mozambique, Sierra Leone, New Zealand, Slovakia, Barbados, Bangladesh, Belarus and the Czech Republic?
PLEASE CHOOSE ANY ONE OF THE ABOVE COUNTRIES THAT WE HAVE CARPET BOMBED WITH B-52S.
PLEASE ENLIGHTEN ME.
Remember, YOUR claim is that the US having embassies is in actuality the US carpet bombing 2 yr olds with B-52s.
“The one that hasn’t kicked in yet is goods and services deflation”
I say bullshit. We are, despite the never-ending happy-go-lucky left-leaning river of diarrhea coming from MSM, in a recession. Go to any restaurant, mall, or Wal Mart. People aren’t buying shit, just like in 2008. Prices are deflating at said stores and restaurants.
Were it not for all the wars, we’d really be in the shit. Wars keep our economy, or at least the parts that really matter, going and funded. WE NEED MORE WARS. It’ll fix everything.
(ctr/alt/sarc)
BTW,
That picture of Christie swearing off cheeseburgers I made yesterday made the “home page” on the cheezburger.com site, nationwide baby. I’m famous bitches….
See, Davos, here is where you’ll get frustrated and stumble, because you know your shit is a fucking lie, I know it is a fucking lie, and every person that will thumb up your comments knows it is a fucking lie.
Again, that’s what the Hate-America club is all about —lying proudly and with much conviction in your ongoing, never-ending motherfucking of the USA.
Facts are an obstacle to your objective.
Davos, Shilling is partly right, and partly wrong.
We are having deflation in assets, wages, take home pay, widgets sold, across the board. It was hidden quite nicely by the rapid inflation in health insurance, happy pills, government spending, offshoring, utilities, steel, rubber, flu vaccines, gasoline, kids clothing, then cotton clothing, food, just to name a few.
Local services for ARBITRARY things, like remodels, roofs, windows, landscaping, cement work, cut their prices dramatically, it is just the imported resources (lumber, drywall, nails, paint) were eating up a chunk of the “savings” so most people don’t notice, nor ask. We had a ton of work done last year and every different tradesman I worked with cut their own throat to get jobs and stay “busy.”
Furniture and appliance stores have been offering zero percent interest, paying the sales tax, plus half off, for years. When the price of steel, cotton, freight and employment taxes are going up for the business, and they cut their throats to try and get you in the door, you cannot tell me that it is NOT a deflationary environment.
Then I read (part) of an article at USA Today. Just as I always suspected Federal pensions are going to equal social security. Yet NO ONE, save RP, EVER mentions that fact. The bastards are willing to reduce our parents to choosing between catfood and insulin, or heat and freezing to death, while they all get the golden paid-for-fucking-life plan. To add insult to injury they aren’t even forced to pay the same percentages in as our poorest social security players.
*Boom*
Really, is there any other choice? Everybody wants everybody else to be the one to pay. Someday soon, hopefully not real soon, everybody will.
The productive middle has been paying for the past 15 years or so, it is only a matter of time before today’s “lucky” workers are held accountable. Too bad our whole freaking way of life will have to be sacrificed before that happens.
“They need a good swat in the ass from an International Coalition and soon.”
War without Congressional Approval. A coalition that wouldn’t spell “coal” without us.
No, I’m with RP. This shit has gotta stop. 2 trillion a year pissed away for the past 10 years is why we are so poor that we can’t pay attention.
Painting a false picture of a massive, worldwide blitzkrieg, even upon our allies and trading partners is far short of a conclusive argument, no less cogent…
TeresaE:
I’m not disagreeing with that. My only point was and remains that this will end in hyperinflation because of the government debt.
In my opinion, after reading the FOMC 2005 minutes I’m fairly convinced that the Fed has purposely levered up our governmental debt to ensure that there will never be deflation, which in this system is quite natural and quite cleansing.
“Tell me, Sam, is there really any difference between Republicans and Democrats when it comes to spending?” And Cohen said, “I want to think about it, do some research, and give you a serious answer.” He called back the next morning and said, “Yes, George, there is. Democrats enjoy it more.” [Laughter] “But otherwise there doesn’t appear to be any difference.”~Fisher.”
http://www.financialsense.com/contributors/d-sherman-okst/tossing-the-consumer-under-the-bus
Go gettum’ Davos.
A vision of the future, TBP in 2025, the brains of Smokey, Admin and Davos, now divested from their bodies, in electrolyte and nutrient broth, telepathing messages translated into posts, still arguing about “boots on the ground” despite the fact our country was taken over by the Chinese in 2021.
Davos the jedi warrior:
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[img
I don’t think anybody with half a noggin believes we need to spend $1 Trillion a year on defense.
We can defend our legitmate interests with far less. Yes, the rest of the world is an evil, nasty, brutish place. But, we don’t have to be involved with nation building. That’s where most of the money went. Not bombing sand niggers or taking over oil fields.
What many believe to be un-needed expenditures of the defense budget includes PENSIONS AND HEALTHCARE for veterans as far back as Korea. A huge chunk… in reality, where do cuts ever materialize? The dishonest conversation based on ideology will throw the other 1% under the bus.
It would also throw significant allies and partners under the bus.
All to feel good while we continue supping lattes and enjoying sports and sitcoms.
I’m voting Paul in the primaries, but I am 90% sure he’d be enlightened to more of these sinister facts when briefed.
Steve Hogan,
“If it’s so obvious, Smokey, why isn’t it being done?”
Because all possible outcomes involve more than a drop of poison.
The only outcome that is off the table is default. No country that prints their own currency will default outright. They will print.
The outcome for the USD will be hyperinflation. That will bring much higher interest rates, and the debt service will crash the economy.
Their will be a trigger, a catalyst that starts the countdown on the USD. It will probably be China, either by publicly discontinuing their purchases of USDs or by their publicly getting behind a new world reserve currency— which will likely be backed at least in part by gold.
When China makes their move, that will be the beginning of the end for the USD.
This shit will transpire within the next 3-6 years.
When Goldman Sachs recommends wise investors bet in the opposite direction.
“This shit will transpire within the next 3-6 years.”
Place your bets ladies and gentleman. GSII is betting that the hinges won’t come off the door for 3-6 years.
100-1 odds on 3-6 hours. 10-1 odds on 3-6 weeks, 5-1 odds on 3-6 months and 1,000,0000,0000,000 -1 odds on 3-6 years.
em·bas·sy (mb-s)
http://www.howjsay.com/index.php?word=embassy
Davos:
Did you see how many comments your articles racked up? When the “recent comments” is a’ glow with your article, it gets read more…
I say deflate so I can snatch up PM’s and weapons/crowd control stock… hell, oil too, so when the folks up top crush the currency during the unrest I’ll be rich rich rich!
Don’t worry, you don’t need to thank me. I raise my taco to that inevitable outcome.
Hippy.
Colma: Actually I think the Bridget piece did better with “Tylers” gang 🙂 as far as comment go. Heck, I even got a nice reply from pretty Bridget via email.
LOL
1,000,0000,0000,000 – 1 odds on 3-6 years.
How long you been using those numbers ?
How about posting a new article on why these four place decimals will apply to the post-crash economy?
New article: I’d be right simply because you’re always wrong. It’s that simple. Besides, when Greece goes it’ll be a #10 on the Rhicter scale.
Davos:
You are clearly wrong in your assertion that we are blitzkrieging Canada and China.
Here’s my predictions and you can take them to the bank:
1) I’m going to take a nice shit after my coffee in the morning.
2) Should the US close it’s bases in Europe for any reason, their governments would have a shit-fit and declare that we are deserting them as Putin surfaces some subs near the Socialist Gravy Trains in the Black Sea (aka oil platforms).
Davos,
Knock knock. Hello McFly, anyone home?
COUNT THE FUCKING DIGITS IN YOUR NUMBERS
Smokey: You can only tell someone a 1,0000 times before they get it…
Howsabout you count Colma’s digits stroking your taint and wiggling around in your sphincter, blockhead. I’ve got better things to worry about than a typo.
Fuck you dopple ganger. Get back to jacking off your neighbor’s dog.
“Howsabout you count Colma’s digits stroking your taint and wiggling around in your sphincter, blockhead. I’ve got better things to worry about than a typo.”
Just for the record I didn’t post that.
I know you didn’t Davos.
That’s why I said—Fuck you dopple ganger. Get back to jacking off your neighbor’s dog.
Please tell me you know what a dopple ganger is, Davos.
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AWD is attempting to improve his Doppelganger skills, hoping to have Davos entered in my Punk Book with permanent ink…
Alas, it is not so.
Strike the last suspect…
It was the wily villain PUNK IN DRUBLIC!
Of course it was Punk. That’s his thing.
I’ve been told that Moron Obama’s Doppelganger resides on this very blog….
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Whether or not he is as fucking stupid time shall tell.
Fuck you Colma, It was you. Even made the same syntax errors as always.
I hope the fuck you do better in your college classes. You don’t get to repeat them for free ya know.
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Punk has nearly surpassed his teacher, the Grand Master Doppel Ganger, LLPOH. He rarely posts as himself anymore, but slips onto the scene in shape-shifted form, leaving only the stale remnant of his presence like a crop-duster in a crowded tavern.
Davos: I am offended that you would dare take a pot-shot at Will Smith, a fine writer, actor and director. No less, your reference to the oft-misunderstood Barack Obama, who is far from dumb.
Hey, AWD:
Piss off. I rescinded my accusation immediately. Class isn’t untill a little later, either. Don’t get your panties in a bunch. The offender is most certainly El Punko Barracho… My first thought was my Doppelganger Detection lesson I gave you last week, but noted the refined skill and syntax used. Most certainly Punk… watch out, he’ll get you too.
Davos… that’s a perfect example of a Baby Boomer and his Xer. I wish I’d though of it…
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I thought PUNK was a girl….
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No sir, Punk has a wifey.
Well done Colma.
Printing money seems to be the way it will go. it is the slowest descent into hell, as all other options would send us strait there.
I’m still holding out for default and death to the TBTF banks.